This study investigates a mechanism or capability that potentially helps an indigenous firm to benefit from the spillovers from inward FDI and protect itself from the possible harms of intensified competition for markets and inputs that are also associated with inward FDI. The mechanism, which we term Iterative Orchestration, entails iteration between divergent and convergent thinking in the firm’s inventive endeavors. We theorize that a demonstrated capacity for such iteration enhances an indigenous firm’s success in invention and the firm’s chance of benefiting from rather than being hurt by inward FDI. Our empirical tests using data from the biopharmaceutical industry in the US provide support for our theory and hypotheses.
